Asean integration seen to benefit Phl banks

MANILA, Philippines - Philippine banks are expected to benefit  from the financial integration program of the Association of Southeast Asian Nations (Asean) set for full implementation by 2020.

“We think this is going to lead to greater market opportunities, (and) at the same time will generate more competition,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said  in an  economic forum.  

“This will also allow greater exchange of technology and innovation and lead to more efficient banks,” he said.

The Asean   aims to create an integrated economic community by 2015. The Asean Banking Integration Framework (ABIF), which aims to  achieve parity of rules and regulation across the 10 countries of the Asean so that banks in the region can begin to operate not as foreign banks but as local banks in any of the 10 Asean jurisdictions, is  expected to be implemented by 2020.

“The objective of the ABIF is to come up with strong, well-managed banks in the Asean region and one of the things that would help do this is to allow greater competition and greater access to markets within the ASEAN region and even to markets outside member jurisdictions,” Tetangco said.

Philippine banks have been raising capital and aggressively expanding in preparation for the Southeast Asian banking integration.

However, local banks still pale in comparison with other Asean banks in terms of assets and capital.

BSP Deputy Governor Diwa C. Guinigundo earlier said the assets of the top three Philippine banks are only as big as that of Thailand’s Bangkok Bank, and half of the assets owned by Malaysia’s Maybank.

The Philippine banking system’s total assets, meanwhile, amounts to only about 70 percent of Singapore’s DBS assets.

In terms of capital, the top three Philippine banks’ figure is again about the same as Bangkok Bank’s total capital. The entire Philippine banking system’s capital, meanwhile, is only slightly above that of DBS’ and Maybank’s.

There is also a Qualified Asean Bank Framework being studied and this refer to those banks allowed to operate in other jurisdictions subject to conditions.

Tetangco in December stressed the BSP will ensure a level playing field between local banks and bigger foreign banks in line with the upcoming regional banking integration.